A woman who owed a credit card company more than £8,000 has been excused from repaying her debt after a court ruled that the ‘secret’ commission paid to the credit card company by the company providing the payment protection insurance constituted an unfair contract term. As a result, the credit card agreement breached the Consumer Credit Act 1974.

The decision has been described as a ‘bonanza for borrowers’ that will allow thousands to avoid repayment of credit card debts, but the reality is less beneficial. The credit card company was unable to provide the court with a copy of the credit agreement originally signed by the woman, which must surely be an unusual occurrence. Had this been available, it is quite likely that the decision would have gone in the credit card company’s favour.